Fully Maintained Operating Lease

How does a Fully Maintained Operating Lease Work?

Under a Fully Maintained Operating Lease, the client rents the equipment from the lessor or financier along with bundling the running costs of the equipment into the monthly payment. At the end of the term, the client hands the equipment back or can purchase the goods at fair market value.

Features of a Fully Maintained Operating Lease Facility

Term of a lease can range from 12 months to 84 months

Client adds the running costs of the equipment into the monthly rental – ie fuel, servicing, registration and roadside assistance

Customer hands the equipment back at the end of the term

Client has the option of purchasing the asset from the financier at the end of the term based on the fair market value of the goods.

100% of the cost of the asset is financed

full monthly payment is claimed as a tax deduction on profit and loss statement

financier claims the gst on the purchase price as an input tax credit

Benefits of a Fully Maintained Operating Lease Facility

by adding running costs of the equipment to the monthly payment, client can easily budget for ongoing expenses as both the monthly payment and operating costs are the same every month

no asset risk held by the customer as they hand the goods back at the end of the term

a Fully Maintained Operating Lease for truck finance allows a client the ability to upgrade trucks on a regular basis in the event large kilometres have been travelled over the life of the truck

reduced tax paid to the ATO as the full payment is claimed as a tax deduction

Fully Maintained Operating Leases are treated as off balance sheet lending which improves the balance sheet position of the business

Example of a Fully Maintained Operating Lease used for Truck Finance

Purchase Price of 5 new Tilt Tray Trucks – $1,500,000 (gst inc)

Finance Type – Fully Maintained Operating Lease

Loan Amount – $1,363,636.36 (client borrows the ex gst amount)

Term – 60 months

Residual – NIL

Payments – monthly in advance

Outcome

Running costs of the tilt tray trucks were included in the monthly rental – ie fuel (a driver received a Caltex fuel card) servicing, tyre replacement, registration and roadside assistance

As client was a fleet operator, they could easily budget for expenses going forward in order to tender for a new contract. They had fixed costs on both monthly payments for the trucks and the running costs which meant that could accurately project net profit for 5 new trucks

Client did not need to payout a residual at the end of the term and would look to upgrade to 5 new tilt tray trucks

Client was happy with the Fully Maintained Operating Lease Structure as the facility for this big purchase did not appear on their balance sheet

Who would use a Fully Maintained Operating Lease Facility?

A Fully Maintained Operating Lease Facility is a form of financing trucks or heavy equipment, for businesses looking to put a fixed cost on operating expenses. In the current climate of decreasing profit margins for owner drivers and fleet operators, many businesses are moving towards fully maintained operating leases in an attempt to have more control over the profits they earn at the end of the year.

Heavy Vehicle Finance suggests that all clients discuss a particular funding scenario with their Accountant before making a decision on what product to use when thinking about truck finance. Even though this form of financing is becoming more popular, a tax accountant will advise as to whether or not a Fully Maintained Operating Lease would be suitable for the financial structure of their business.

To ask more questions about a Fully Maintained Operating Lease Facility

To discuss how a Fully Maintained Operating Lease can help you pin down the running costs of your business, please call one of our Finance Consultants on 1300 788 740. One of our specialists Finance Consultants will be able to discuss how the product works and how it will benefit you. Alternatively, you can fast track the process by completing our online finance pre-approval form.

Finance Pre-Approval

HEAVY VEHICLE FINANCE REVIEWS

All I had to do to get my loan approved with Heavy Vehicle Finance was to upload my business account statements for the last 90 days. Once I did this, the loan was approved within 24 hours and the deal then settled not long after this. Great job Heavy Vehicle Finance.

Harley Iacovelli

H & M Trucking Pty Ltd

Just dropping by to send a very big thankyou to Nathan Elliott. Nathan recently settled a couple of finance deals on a Western Star Prime Mover and Titan Quad Float for me. The process was very quick, easy and was probably the only time I have dealt with finances without getting a headache. Keep up the good work Heavy Vehicle Finance.

Heavy Vehicle Finance has facilitated 5 new Hino Horse Trucks for our Transport business over a 5-6 year period. On each occasion, we were happy with the quick turnarounds for approvals right through to the settlements. I hope to continue using Heavy Vehicle Finance for future purchases of our horse trucks.

Tracey Hall

Scone Equine Transport Pty Ltd - NSW

Great service, very professional, very proficient, and excellent communication throughout the process. Highly recommended and many thanks from Northern Rivers Concrete Pumping.

Aaron Bylos

Northern Rivers Concrete Pumping Pty Ltd - NSW

Without Heavy Vehicle Finance my business venture would have never left the ground. In my circumstances there was a fair bit involved as I was starting from scratch but with the professional experience and advice Nathan gave me I was able to purchase a Truck, Superdog Trailer and Skidsteer stress free. I am definitely recommending Nathan and his team from Heavy Vehicle Finance for anyone considering Finance for their equipment.

Ben Fisher

Rykiner Contracting Pty Ltd - SA

Nathan gave great service and a great deal, can’t speak highly enough of him, would recommend him to anyone, he is efficient and quick and friendly AAA plus Thanks Guys

Angela McDonald

Niduts Pty Ltd - QLD

Just like to say thanks to Nathan at Heavy Vehicle Finance for the excellent service provided in the purchase of my brand new Mack truck. Quick. Easy no hassle and very friendly service. Thanks Nathan. Highly recommended Will use again if wife lets me.